Principles of Economics (12th Edition)
12th Edition
ISBN: 9780134078779
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
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Question
Chapter 6, Problem 3.1P
(a)
To determine
How the consumer’s demand for costumes concert affects by decreasing the air travel price.
(b)
To determine
Income and substitution effect of trip.
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3.15 Mandy is ordering a set of football tickets for the coming season. She plans to
sell the tickets to make some money. There are two types of tickets: tickets for
road games and tickets for home games. For each road game ticket, she could
make a profit of $150, and for each home game ticket, the profit is $50 on
average. The ticket office offers two price options:
(a) $5/home ticket, and no more than $50 purchase per person; $50/road
ticket, and no more than $300 purchase per person.
(b) $7.5/home ticket, and no more than S100 purchase per person; $45/road
ticket, and no more than $250 purchase per person.
How many tickets of each type should Mandy purchase so as to maximize the
total profit she can make?
You are a University student who must live off-campus in the second year. There are two types of one-bedroom apartment where you prefer to live because it is near the campus. One rents for $400 per month and the other $360. According to the University Students’ Housing Bureau 80 percent of apartments in the area consists of the $400 type while the remaining 20 percent are of the $360 type. You need to visit the apartments to discover the rent. Suppose the first apartment you visit cost $400 and the opportunity cost of your visit is $6 per visit.
1. If you are risk neutral person should you visit another apartment or rent the one you have found.2. Suppose you visit another apartment and find out that it rents for $400, should you visit another apartment?
Brenda wants to buy a new car and has a budget of $24,000. She has just
found a magazine that assigns each car an index for styling and an index for gas
mileage. Each index runs from 0 to 12, with 12 representing either the most
styling or the best gas mileage. While looking at the list of cars, Brenda
observes that on average, as the style index increases by one unit, the price of
the car increases by $2,000. She also observes that as the gas-mileage index
rises by one unit, the price of the car increases by $4,000.
(a) Illustrate (for yourself) the various combinations of gas mileage (G) and style
(S) that Brenda could select with her $24,000 budget. Place gas mileage on the
horizontal axis.
• Her budget line is given by 4,000*G +
[ Select ]
*S=
[ Select ]
• The X-intercept of her budget line is equal to
[ Select ]
• The Y-intercept of her budget line is equal to
[ Select ]
Chapter 6 Solutions
Principles of Economics (12th Edition)
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